The company released the 2024Q3 performance report:

Q3: Revenue of 5.548 billion yuan (+3.03% YoY), net profit of 0.492 billion yuan (YoY +2.22%); net profit without return to mother of 0.482 billion yuan (YoY +1.05%); Q1-Q3: Revenue 16.512 billion yuan (YoY +7.45%), net profit attributable to mother 1.433 billion yuan (YoY +5.19%); net profit of non-attributable net income of 1.405 billion yuan (YoY +5.26%).

The month-on-month deceleration was mainly due to an increase in the export sales base.

Q3 Revenue analysis: Domestic sales are better than peers, and the export sales base is rising

Domestic sales: We expect a slight year-on-year decline, similar to the flat and slight increase in Q2. The company's performance is far better than that of its peers under severe industry challenges;

Export sales: We expect low double-digit growth, which will slow down from 24Q2. The background is 24H1 high growth, low base, and overseas inventory replenishment. At the same time, the company upgraded the 24-year related transaction guidelines from 6.2 billion to 6.95 billion (6.85 billion for sale of products+0.1 billion for purchased goods). Our split Q4 is expected to correspond to 1.78 billion. We expect the export sales (related transactions+other export sales) base for 23Q4 to be about 1.9 billion. In comparison, the upward style of the company's guidelines is more cautious.

Q3 Profit analysis: steady profit

Q3 gross profit margin 24.62%, +0.24/-0.76pct; Q3 net profit margin 8.87%, same/month-on-month +0.44/ -0.07pct, with sales/management/R&D/finance expenses rates of -0.98/-0.09/+0.44pct respectively, with a total of four fees -0.44pct year on year; we believe that the company's Q3 focuses on improving marketing efficiency. Export sales share (gross margin is lower than domestic sales), and the operating strength and resilience are outstanding..

Investment advice:

Our point of view:

Net interest rates are extremely stable in the Q3 pressure environment, and a slight deceleration in export sales due to an upward base is also in line with the expected trend; domestic sales are expected to improve under Q4 trade-in pressure. Referring to the historical dividend level of 50-80%, the company is a high-quality target for steady management.

Profit forecast: Based on the company's domestic and foreign sales growth rate and industry development in the third quarter, we lowered our profit forecast. The estimated 2024-2026 revenue is 22.82/24.28/25.567 billion yuan (previous value 22.894/24.36/25.652 billion yuan), +7.1%/+5.3% YoY, net profit to mother of 2.319/2.483/2.61 billion yuan (previous value 2.387/2.599/2.801 billion yuan), +6.4%/+5.1% YoY; corresponding to PE19/18/ 17X, maintaining a “buy” rating.

Risk warning:

Industry sentiment fluctuates, and raw material costs fluctuate.